Expectations of tremendous growth in demand for batteries to power electrical vehicles (EVs) and unquenchable thirst for semiconductors have put the spotlight on key metals and uncertainty about EV growth is a key factor in the minerals' price volatility
The mineral resources are concentrated in most cases in a small number of locations, in Congo (cobalt), in Chile and in Bolivia (lithium), in Russia (nickel, titanium) or in China (rare earth)..nor should byproducts from steel making, such as neon gas (Ukraine) be ignored
Asian and Western manufacturers of semiconductors and batteries are essentially dependent on a secure supply chain for access to these resources...
These manufacturers raced to lock-in long-term contracts - this is case in the electrical vehicle (EV) car and battery industries where China's industrial vertical integration is front-running Western competitors
However, access is becoming a grave concern in specific cases
- 45% of the high-grade neon in gas-phase lasers used to make chips for semiconductor companies was produced in Ukraine before the war. Majors industrial gas producers, such as Air Liquide, Linde Group, and Air Products have managed to compensate volume losses suffered by Ukrainian Ingas and Cryoin
- Boeing is the most important client of major Russian producer of titanium VSMPO-AVISMA - producing airplane parts on location in partnership with the firm (the relationship is 'suspended' but Boeing has not pulled out) - and according to recent reports (2023), VSMPO-AVISMA had been removed from the sanctions list after warnings from Airbus - an estimated 65% of titanium used by Airbus comes from the Russian company today
Japan (for titanium) and Australia (lithium, cobalt) are also exporters of the minerals but their production capacities are stretched
The story of these essential minerals is far from over...and ESG-friendly investments (such as semi-conductors) areas closely linked to US national interest as political pundits let on